Expensive and Confusing Group Medical Insurance Changes for Companies with 51-100 Group Medical Enrolled Employees

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Expensive and Confusing Group Medical Insurance Changes for Companies with 51-100 Group Medical Enrolled Employees

Expensive and Confusing Group Medical Insurance Changes for Companies with 51-100 Group Medical Enrolled Employees

Posted by on Dec 16, 2015 in Blog News

Prior to renewal season 2015, many small-medium size employers weren’t fully aware of the magnitude of the impact that would be caused by the ACA’s ‘small group’ employer definition change from 50 or fewer employees to 100 or fewer employees. Due to the complexity of the law and lack of early carrier data surrounding the changes, many employers were shocked to find high group medical insurance renewal rates with reduced benefits. Although a relatively small number of employers experienced rate reductions, the majority learned that the most comparable ‘small group’ plans often carried premium increases of 25% – 45% for plans with higher deductibles and out-of-pocket maximums. This was particularly the case for employers with 50 – 100 benefit enrollees that previously had large group composite rates.  Many of these employers were able to ‘early renew’ to obtain more modest renewal rates and plan benefits.
In addition, employers learned that more census data must be gathered from employees to include all dependent birth dates in order to calculate an entire family’s premium.  This would lead to increased administrative time and complexity as well as family premiums, in many cases, that nearly doubled.

In response to these issues, the Obama Administration passed the Protecting Affordable Coverage for Employees (“PACE”) Act on October 7, 2015.  In general terms, the PACE Act allows each state to determine whether it will enforce the new small group definition and member level rating structure for employers with 100 or fewer employees or whether it will retain the 50 or fewer definition.  A number of states have decided to retain the 50 or fewer definition as a result of the negative impact that would have been imposed on their business community.  California has not yet reestablished the ’50 or fewer’ definition.

This change has no effect on other aspects the ACA requirements, including the Employer Penalty or reporting on Forms 1094-C and 1095-C.

We will continue to keep you apprised of any new developments.